J.P. Morgan Healthcare Conference

JPMorgan's big health-care confab: What to expect

Exhausted. Depressed. These are the words biotech analysts and investors are using to describe their moods coming out of 2015. Which means this year's JPMorgan Health Care Conference, which kicks off next week, could take on a more muted tone than in previous years.

Thousands of investors, analysts, executives and entrepreneurs head to San Francisco in the second week of January for the conference, considered a barometer of sentiment across the industry as the year gets underway. More than 450 companies are slated to present to investors at the meeting.

"Sentiment will be weary, but not funeralesque," said Les Funtleyder, portfolio manager of E Squared Asset Management and author of the book "Health-Care Investing." "Normally, sentiment is extremely bullish at JPMorgan, but once every few years you get a situation like this."

The situation: a 23 percent decline in biotech stocks from highs in July, driven by concerns over pressure on drug prices, valuations that have been rising for six years, and some stock-crushing clinical trial setbacks toward the end of the year. The Nasdaq biotechnology index sank 9.4 percent this week through Thursday as geopolitical issues weighed on the broader market.

Thomas Tolstrup | Getty Images

"Folks are just depressed," said Robert W. Baird analyst Brian Skorney. "No one is looking at the sell-off as an opportunity, so there are no buyers."

Some participating companies are less willing to meet with hedge funds that take both long and short positions, Funtleyder said. They want to meet with long-only investors, meaning those positive on stocks, Funtleyder said, a sign he took of increased weariness on companies' parts as well.

Despite the somber mood, 2015 wasn't as bad as it sounds.The Food and Drug Administration approved 45 new medicines, the most in 19 years. Deal activity was explosive, at more than 530 transactions worth more than $296 billion, according to MergerMarket, up 29 percent from 2014.

Read MoreThese are the biotech stocks to own next year: Pro

It was also the sixth-straight year biotech outperformed the broader market, and one of the top-performing hedge funds last year was focused on biotech: Perceptive Advisors, up about 47 percent in 2015 with top holdings including Neurocrine Biosciences and Sarepta Therapeutics.

But drug pricing concerns are expected to persist this year, according to Jefferies, which surveyed 92 investors about their outlook for 2016.

"In an election year, we expect drug price concerns to remain in the spotlight during the Presidential campaign (though they could be overshadowed by national security issues), which could make skittishness among generalists — whose money flow had helped catalyze the run-up — remain," Jefferies analysts wrote in a Thursday research note.

The JPMorgan conference often brings big news: Deals are frequently announced during the weekend before the meeting, and companies including Celgene and Regeneron are expected to provide financial results and forecasts, according to Evercore ISI analyst Mark Schoenebaum.

After the dismal start to 2016, investors are certainly hoping for some upside surprises.